Complaint issues
One issue that the FSA's letter does not address is the issue of complaints.
It is likely that this review will gain a lot of publicity which will in turn generate more complaints. Which? is asking for the FSA to 'name and shame' the worst offenders and we note that the FSA's Money Made Clear website has detailed information about this review which includes a link about "Making a Complaint".
The complaints would need to be dealt with under the requirements of DISP section of the FSA Handbook. Firms may consider using the FSA template to assess the suitability of advice in complaint cases. In our view, it may be difficult to make a case for doing otherwise if the firm is to be seen to be treating its customers fairly. We would be surprised if the FOS were not to apply a broadly equivalent standard of test in any case that was appealed to it, and we anticipate that any firm losing at the FOS a material number of pension switching complaints may find itself the focus of further regulatory scrutiny down the line.
If a firm has reviewed a case and subsequently receives a complaint, good practice dictates that the person reviewing the complaint should be independent of not only the adviser but the reviewer. Independent adjudication might be sought from an outside expert if it becomes difficult to find a suitably independent person within the firm to assess a complaint. It may be tempting to rely on the earlier assessment of suitability, but to do so without reassessment in the light of any representations by the complainant would be to fail to treat him or her fairly. Management information going forward probably needs to provide data on pension switching complaints specifically to senior management.
We would expect that any compensation that derives from a review would be made on a similar basis as would apply in the case of a complaint.
We can assist any firm struggling to adequately resource their complaint handling process with a full range of services.
Contact us to find out how OAC can help you resolve your pension switching review issues.
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